Definitions Unit 4

The process that uses the resourses of an organisation to provide the right goods or services for the customer.

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Operational Objectives

Specific, focused targets of the operations mangement function within an organisation.

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Flexibility

The ability of an organisation to change its operations in some ways.

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Dependability

Measures whether a business is 'on time' in providinf its customers needs.

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Adding Value

The process of increasing the worth of resources by modifying them.

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Labour Productivity

A measure of the output per worker in a given time period.

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Capacity

The maxim total of level output or production that a business can produce in a given time period. A company producing at this level is said to be producing at full capacity.

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Capacity Utilisation

The percentage of a firms total possible production level that is being reached.

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Efficiency

Output (production) is maximised from a given level of inputs.

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Economies of Scale

The advantages that an organisation gains due to an increase in size. These cause an increase in efficiency (a decrease in the unit cost of production), can also tend to improve labour productivity

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Diseconomies of Scale

The disadvantages that an organisation experiences due to an increase in size- cause a decrease in efficiency and/or an increase in unit cost of production.

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Capital-intensive production

Methods of production that use a high level of capital equipment in comparison to other inputs such as labour.

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Labour-intensive production

Methods of production that use high levels of labour in comparison to capital equipment.

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Capacity

The maximum total output or production that a business can produce in a given time period.

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Under-utilisation of capacity

When a firms output is below the maximum possible. Also known as excess capacity or spare capacity. It represents a waste of resources and means that the organisation is spending unnecessarily on its fixed assets.

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Capacity Shortage

When a firms capacity is not large enough to deal with the level of demand for its product.

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Rationalisation

A process by which a firm improves its efficiency by cutting the scale of its operations.

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Lean Producation

Production based on the range of time-saving and waste-saving measures inspired by Japanese manufacturing companies.

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Time-based Management

An approach that recognises the importance of time and seeks to reduce the level of 'unproductive' time within an organisation- leads to quicker response times, faster new product development and reductions in waste = greater efficiency.

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Just-in-time

A Japanese philiosophy that organises operations so that items of stock (inventory) arrive just at the time they are needed for production or sale.

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Reduced Lead times

Reducing the time taken between an order being received and the final product being delivered to, or provided for, the customer.

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Quality System

The approach used by an organisation to acheive quality. Most likely systems can be classified as either quality control or quality assurance.

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Quality Control

A system that uses inspection as a way of finding any faults in the good or service being provided.

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Quality assurance

A system that aims to achieve or improve quality by organising every process to get the product 'right first time' and prevent mistakes ever happening.

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Kaizen

A policy of implementing small, incremental changes in order to acheive better quality and/or greater efficiency.

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Mass Customisation

Offering individually tailored goods or services to customers on a large scale.

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Outsourcing

The transfer of activities, which were previously conducted in-house, to a third party, outside of a business.

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Offshoring

Used to describe outsourcing/subcontracting when the activity being transferred takes place in a different country to the contracting company.

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Inventories

Items that firms need to produce for, or supply to, customers.

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Inventory control chart

A diagram that is used to register levels of stock/inventory over a period of time.

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Buffer inventory level

The minimum level of of inventory targeted by a business- should be enough to cover for sudden increases in demand or unexepected problems in getting inventories.

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Re-order level

The inventory level at which an order is placed for new inventory.

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Lead time

The time taken for a customer request to be fulfilled. In case of inventory control the lead time is how long the supplier takes to deliver an item once the order has been placed.

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Re-order quantity

The actual number of products purchased from the supplier in a particular order.